Chapter-4

Analyzing the Marketing Environment

 Topic Outline

• The Company’s Microenvironment

• The Company’s Macro environment
• Responding to the Marketing
Environment
 The Marketing Environment
The marketing environment includes the
actors and forces outside marketing that affect
marketing management’s ability to build and
maintain successful relationships with
customers
 Marketing Environment
Mega/Macro Micro
Demographic
(People, Consumer, Age, literacy etc.)
Market
Political Demand
(Form of govt, political stability,
legislation,
Consumer
Socio-Culture
(Culture, Tradition, Belief, Values& Industry
lifestyles of people, Social class)

Economic Competition

(Agriculture, Industry, Goods, Services, Govt. policies

EXIM, Inflation, Taxes, Exchange rates,
labour & energy sources)
Supplier
*Nature (Natural resources, related factors
Ecology, Climate)

Technological (Affects raw material resources,

process, operations, customer segments, IT,
Telecom, Machinery)

Legal(Business Legislation like Corporate affairs, Consumer

protection, Employee protection, Sectoral protection, trade
practices, regulation) protecting national firms & Bycaught
foreign
 Marketing environment
• Uncontrollable marketing management functions, potentially relevant to marketing decision
making & constraining or dynamic in nature
• It influences marketing activities like no. of customers, their incomes, purchasing power, needs
& wants, buying motives, behavior etc.
• Internal Environment-Influences operation of a organization, Labor, Management relations,
productivity, Materials, Financial & Human resources, Morale of Employees, Values &
Perception of Top mgmt. etc.
• National Economical Environment-Nature of property rights, Price mechanism, Capitalist,
Socialist, Communist Changes in world economy, WTO etc.
• Structural Economy-Occupational distribution of Labor force employed, Capital formation
composition, Trade composition. Such factor affects Agriculture, Industry, Services etc.
• Economic Environment-GNP national income, per capita Income, Personal income
characteristics, Money supply, value of money, inflation, distribution channels & characteristics
• Political & Legal Environment- Political organization, ideology of the government, philosophy of
the political parties, degree & extend of Bureaucratic delays, red tape etc. Trade policies,
Export-import policies, tariffs, State of law & order, Disturbances,
• Cultural Environment-knowledge, Beliefs, Art, Morals, Law & habits acquired by men as a
member of society, Religion& Social festivals, Family structures & sizes.
• Technological Environment-Technological advancements

5
 Controllable /Uncontrollable
Internal/External Marketing Environment
a) Microenvironment consists of the
actors close to the company that
affect its ability to serve its customers,
the company, suppliers, marketing
intermediaries, customer markets,
competitors, and publics
The Company’s Microenvironment
• Actors in the Microenvironment
 Controllable/
Internal Marketing Environment
Resources

Objectives Internal Strategies

Policies
The Company’s Microenvironment
i) The Company
• Top management
• Finance
• R&D
• Purchasing
• Operations
• Accounting
 The Company’s Microenvironment
ii) Suppliers
• Provide the resources to produce goods and
services
• Treated as partners to provide customer value
iii) Marketing Intermediaries
• Help the company to promote, sell and distribute its
products to final buyers
 Types of Marketing Intermediaries

Physical
Resellers distribution
firms

Marketing
Financial
services
intermediaries
agencies
 The Company’s Microenvironment
iv) Competitors
• Firms must gain strategic advantage by positioning their
offerings against competitors’ offerings
v) Publics
 Any group that has an actual or potential interest in or impact on
an organization’s ability to achieve its objectives
 Financial publics
 Media publics
 Government publics
 Citizen-action publics
 General public
 Internal publics
b) Macro environment
 The Company’s Macro environment
i) Demographic Environment

Demography is the study of human populations in

terms of size, density, location, age, gender, race,
occupation, and other statistics
• Demographic environment is important because it
involves people, and people make up markets
• Demographic trends include age, family structure,
geographic population shifts, educational
characteristics, and population diversity
 i) Demographic Environment

• Growth in the rural population

• A changing family system
• The changing role of women
• Increasing diversity
• Includes detail about the population structure, age –
group, division of income etc.
• It help marketer to develop an understanding about
prospective consumers and market potential of a
product.
• It also help marketer to determine nature of
consumer demand.
 ii) Economic environment
• By economic environment we mean the purchasing
power and desire to spend the income by
consumers, results in effective demand and
influence economic conditions.
• high economic growth leads to marketing boom in
many industries and vice versa.
• Subsistence economies consume most of their own
agriculture and industrial output
• The global financial crisis of 2007–2009 has affected
the consumption and production of many products
 iii) Technological environment

• change in technology means

change in production and
production possibilities, their
manufacturing process, cost and
qualities.
• it has a wide impact on marketing
activities like : advertising, pricing,
marketing research etc.
 iv) Legal and political environment

• govt. in every country have some

rules and regulations to prevent
from monopoly, malpractices, to
protect consumer, to protect
society.
• it has great impact on marketing
policies,strategies and business
working.
 v) Socio – culture environment
• it determines the value system of the
society which in turn affects the business
in long run.
• it creates new demand and old ones are
lost in due course.
• It is essential for marketing management
that it should prepare the marketing
plans acc to the changing needs of
society.
 Scanning of marketing environment
• Though future is unpredictable, but marketer
can obtain appraisals of what is “most probable”
• to monitor changes in the marketing
environment effectively, marketer needs to scan
the marketing environment.
• acc to Philip kotler:
environment scanning is a process of collecting
information about the forces present in the
marketing environment.
 Strengths
• Marketing and advertising capabilities, which
increase brand awareness and create stronger
demand for company’s products
• Strong and extensive distribution channels in
the U.S.
• Brand awareness and reputation
• Sound financial performance with one of the
strongest cash flows
 Weaknesses
• Lack of product breadth and offerings at
different price points
• Weak direct distribution channels in China and
India
• Dependence on iPhone and iPad sales
• Low expenditure on R&D compared to other
companies leads to fewer patents, innovations
and products introduced to the market
• Incompatibility with other OS
 Opportunities
• The Internet of Things (IoT) market is expected
to grow significantly over the next decade
• The market for wearable gadgets and the
additional revenue streams associated with
wearable gadgets will see huge growth over
the next few years
• Expanding mobile payments market
• Mobile enterprise app market will gain
traction as more businesses will shift toward
buying subscription based software
 Threats

• Intensifying competition puts pressure

on Apple’s market share, revenue and
profits
• Strong U.S. dollar can affect company’s
revenues and profits from abroad
• Lawsuits over patent infringements
resulting in damaged brand reputation
 Strengths
• The best global brand in the world in terms of
value ($77,839 billion)
• World’s largest market share in beverage
• Strong marketing and advertising
• Most extensive beverage distribution channel
• Customer loyalty
• Bargaining power over suppliers
• Corporate social responsibility
 Weaknesses

• Significant focus on carbonated

drinks
• Undiversified product portfolio
• Negative publicity
• Brand failures or many brands with
insignificant amount of revenues
 Opportunities

• Bottled water consumption growth

• Increasing demand for healthy food and
beverage
• Growing beverages consumption in
emerging markets (especially BRIC)
• Growth through acquisitions
 Threats
• Changes in consumer preferences
• Water scarcity
• Strong dollar
• Legal requirements to disclose negative
information on product labels
• Competition from PepsiCo
• Saturated carbonated drinks market
Thank You